Paid content – are our newsrooms ready for it?

“If you are good at something, never do it for free” Even if the motto of the Joker, the villain in the movie “The dark knight”, has sinister motives behind it, there is a truth we can learn from.

We, as an industry, have been very good at collecting, evaluating, selecting, editing and publishing content for centuries now and got paid very well for this service.

So we are now finally trying to apply this principle to our digital offerings after we had to realize (painfully) that the concept of selling readers (don’t you mean viewers or eyeballs?)  to advertisers does not bring enough money to sustain or grow our business.

Ken Doctor, a very well known media analyst from the USA, identified among others five major trends in the paid content field:

  • By the end of 2013 more than 300 daily papers in Europe, Asia and the US will have some sort of a pay gate or paid content solution installed. And this does not depend on the size of the newspaper, those 300 comprise of small regional papers as well as well known titles like the New York Times.
  • Regarding the pay system, it seems that the so-called “Metered Model”, where the user gets a certain amount of articles for free every month and has to pay if he wants to get more, is the most adopted model.
  • Ken sees that there is a “3%-rule” when it comes to how many people who visit and use our websites can morph into serious business i.e. paying customers.  According to this rule, if the websites attracts 1 million unique visitors, potentially 30.000 paying subscribers would become the goal. As a current benchmark: The New York Times, one of the most successful paid content examples, holds at about 1.5% to 2% with about 500.000 subscribers.
  • And finally we talk about “all you can consume” packaged and brand subscriptions, the allow the customer to access and use all the offerings on print and digital platforms, combined with additional benefits and services to sweeten the deal even more.

Based on experience so far, there are new success factors that are relevant in the paid content game. Quality content that is compelling and unique is a must, but not enough.

Another two factors, among many others, are imperative to master in this game: the loyalty of the user and the process of conversion of users to customers and the management of the customer life cycle.

Content categories

If we categorise content or stories we are dealing mainly with four major types:

  • Non-foreseeable events that cause “Breaking News” which are exclusive or unique and we, as the media house, are the only one who publishes them
  • “Breaking News” which is not exclusive and in the public domain
  • Non-breaking news which is exclusive or unique, and
  • Non-breaking news which is non-exclusive.

From what we have seen in many media organisations, looking at the amount of stories currently produced, we can estimate that the first category; breaking news and exclusive, is a very rare species. This category also includes those famous scoops that every newsroom dreams of. To put a number against it, we can estimate that those scoops comprise on average perhaps 0.1% to 2% of all published stories in a month or year.

The second category, breaking news and not exclusive, appear more often. These are the plane crashes and earthquakes, sudden resignations of public people or other events, that are not “announced”. Again, to put a rough number against it, these events occur perhaps in 2 or 5 cases out of 100 published stories.

The third category, the non-breaking news that is unique and exclusive, very often consists of investigative pieces; themes and topics driven by the editorial, and often factor as a bigger slice what’s available. Depending on the publication, regional, national or local and other factors, we estimate about 5 to 10% of all published stores belong to this category. Here the biggest variance appears since local or niche publications can have also a much higher value than 10%.

This leaves us with the last category, the non-breaking and non-exclusive stories. By adding up the percentage of the other three categories, we can estimate that about 80% to 95% of the stories that are produced every day in the newsroom belong to this category.

If we assume that commodity content can be obtained for free, only 5 to 20% of the content we provide is potentially sell-able. The question is if this is enough to make a strong case to our potential customers.

Moving the shares

In order to offer a striking argument to our users, who are as yet not willing to pay for a “virtual package” but pay for the actual usage of our content, we need to shift this balance. But how can this achieved?

Firstly, by increasing original “home-grown” stories and topics which are initiated and driven by the staff rather than reacting to events that happen.

The second measure could be to increase the attractiveness of the “commodity” content by making it more unique through enrichment with compelling add-ons (info graphics etc.) and improving the overall experience. Finding novel ways to bring people into the story, to achieve all-round engagement is crucial for capturing, keeping attention and turning it into currency.

And thirdly, obtaining original content in the form of rights for certain events or news, for example sport events, increases of course the share of unique content, which consequently increases the likelihood that users will pay for it.

The quality of traffic and the user

The second big question is do we as media brands have enough potential customers to sell our content to. Based on an analysis carried out by an American company called Scout analytics, there are in general four types of users that visit news websites when it comes to frequency.  They are called:

  • “Fans” which are visiting the site more than twice a week
  • “Regulars” who visit the site once or twice a week
  • “Occasionals” come to the offerings twice or three times a month, and
  • “Fly-bys”, who visit the site only once per month

If the traffic is categorized according to these characteristics, it turns out that in average only 5% to 10% of visitors are “Fans” and “Regulars, the rest are “Occasionals” and “Fly-bys”.

Concerning the traffic the picture is the other way around. Those 5% to 10% are responsible for the majority of traffic on the site, around 70% to 80%. In order to find customers among the users, it seems to be evident that only regular users are potentially willing to pay or to subscribe to our offerings. So basically only Fans and some Regulars will be potential customers.

Currently many websites are still operated by the performance indicator Unique users and page views. Both indicators are important but not enough anymore. The increase of frequency, loyalty and dwelling time of visitors to the website becomes more and more crucial in order to have a critical mass of potential customers.

Keeping the visitor interested in staying on and returning to the website has a lot to do with usability and user guidance as well as high quality, engaging content. A site search engine that offers usable results, linking within the site to related content as well as recommendations along the lines of “people who have read this and are also interested in that” help to encourage people to extend their time spent on news websites.

Converting users to customers

The third aspect focuses on the management of the process that converts a ‘user, who knows us, into a ‘customer who pays for our other services and stays with us for as long as possible’.

This process must create the “ideal” path that leads the user deeper into a media brands offerings and then can identify and remove quickly the “blockage points” of the path where the user either stays at a level or even leaves completely by turning to a different offering on the web.

The concept of a “Sales funnel” or “user to customer conversion funnel” has been used in other industries and is a standard in any sales operation.

For digital products this is rather new but a few companies such as Amazon or online gaming companies are masters in this game. In our industry for example Financial Times in UK puts a huge effort into analyzing the behavior, identifying the weak links in the funnel and optimizing them constantly.

Rob Grimshaw, Managing Director of FT.Com said once “Only because you have an online shop does not make you a good retailer”. Providing attractive products is only the foundation.

A media house then needs to put a lot of thought and effort into building and expanding a loyal fan base that use the products on a regular and frequent basis.This includes making it as easy, valuable and comfortable as possible to become and stay a loyal customer. These are just some of the most crucial components media organisations have to do to become ready for the paid content game.

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